File folders/envelopes and pocket file folders are formed on a common type assembly line. A web of material is fed through the line and the creasing, cutting, stripping, buckling, gluing operations are added to the line as needed. In forming a pocket type file folder, gussets are formed along each side of the pocket by cutting a tab on each edge of the file folder and gluing the tabs together in the final step of the process. The resulting folder has the gussets extending outwardly from each side of the pocket which requires special handling because of the increased width of the folder and special storage because of the additional space requirement. At the present time in order to overcome this problem, the gussets are manually tucked into the sides of the pocket on discharge of the file folder from the line.